Turquoise offers post-trade choice for equities

Turquoise, the multilateral trading facility majority owned by the London Stock Exchange, has announced plans to offer clearing choice from November this year, following in the footsteps of rivals BATS Europe and Chi-X Europe.

Turquoise, the multilateral trading facility (MTF) majority owned by the London Stock Exchange (LSE), has announced plans to offer clearing choice from November this year, following in the footsteps of rivals BATS Europe and Chi-X Europe.

Subject to regulatory approval, Turquoise will offer members the ability to clear trades using either EuroCCP, the MTF's incumbent clearer, SIX x-clear, LCH.Clearnet – a takeover target for the LSE – or Cassa di Compensazione e Garanzia, the Italian clearing house acquired by the LSE as part of its takeover of Borsa Italiana in 2007.

Turquoise will allow members to select different clearing houses for equity trades transacted in different countries and the MTF has said it will look to encourage other clearing houses to join its interoperability initiative in due course.

The ability to select from a range of clearers allows market participants to consolidate their flows with the clearing house of their choice, thereby reducing the overall cost of trading.

“Interoperable clearing on Turquoise is great news for our customers, and a positive step forward for European market infrastructure as a whole,” said Turquoise CEO Adrian Farnham. “It will give customers choice and drive competition in clearing. This will in turn encourage further efficiency and innovation in the post-trade space.”

BATS Europe, the MTF owned by US-based BATS Global Markets, introduced its preferred clearing model on 29 July, which allows trading members to choose between SIX x-clear, LCH.Clearnet and EuroCCP.

Under BATS' scheme, trading participants on both sides of the trade must nominate the same preferred clearer, with EMCF, BATS Europe's incumbent clearer, acting as default CCP if the brokers do not agree. EMCF had previously declined to participate in interoperability schemes, but has since relaxed its stance and will join BATS' service next year.

EMCF will also participate its Chi-X Europe's clearing choice model – along with EuroCCP, LCH.Clearnet and SIX x-clear – from 1 January 2012. Nasdaq OMX Nordic, operator of domestic stock exchanges in Sweden, Finland and Denmark, is also preparing its interoperability plans and is expected to unveil its implementation plans in the coming weeks.